Heat & Buildings Strategy: What’s in, what’s missing and what’s next

After many delays, the government have finally released their plans on how they aim to cut emissions from the nation’s building stock. 

The scale of the challenge here is sizeable. Emissions from buildings represents nearly a quarter of UK emissions, largely from heating our buildings with gas. 

Broadly speaking, this publication has been warmly received from industry. Having a strategy in place now that sets out plans for decarbonising our buildings is a big step – but this is just the start and the hard work starts now. 

We’ve taken a look at some of the key insights from the government’s strategy below. 

What’s been announced?

  • Support for heat pumps – the government has made clear that they see electric heat pumps as ‘central’ to its net zero strategy. This has been backed up with the launch of the £450m boiler upgrade scheme, which will offer small businesses grants of £5,000 to switch to an air source heat pump. For ground source heat pumps, there will be grants available up to £6,000. This announcement along with the launch of the ‘heat-pump ready’ innovation programme are key to steps towards the government’s target of 600,000 heat pump installations by 2028.
  • New obligations for boiler manufacturers – in addition to targeted direct support  the government is consulting separately on a ‘market-based mechanism’ for low carbon heat. This will likely result in a new obligation for the manufacturers of boilers to sell an increasing percentage of heat pumps.
  • Re-balancing electricity & gas costs – the government has promised a call for evidence on ‘fairness and affordability’. Much attention has recently focused on the ‘policy costs’ that currently sit on electricity bills as opposed to gas. To make technologies such as heat pumps and electric vehicles more attractive, government will seek input from industry as to how to distribute these costs more evenly. Initial suggestions include shifting costs onto gas bills, introducing a carbon price on both gas and electricity or moving these costs into general taxation.
  • Phasing out fossil fuel heating – one of the headline announcements is the ambition to end the sale of fossil fuel boilers by 2035. For off-gas grid buildings, the government is planning on introducing regulation to ensure no new fossil fuel heating installations are installed in large non-domestic buildings by 2024 and small and medium non-domestic buildings by 2026.
  • Skills & training – a full appraisal has been promised as part of the Heat Network Skills Programme. In the next year further research will be undertaken to understand the existing installer workforce – in particular any barriers to upskilling heat pump installers. There will also be a focus on entry level roles and what changes can be made to the apprenticeship framework for example.

What’s missing?

  • Energy efficiency – there is one big omission from this strategy and that is a clear plan for improving the energy efficiency of our  building stock. In our report ‘Renewable Nation’, the modelling found that by installing extensive energy efficiency retrofit measures, we could deliver a 10% reduction in peak winter head demand. Despite this, there are no substantive policy announcements on energy efficiency in the strategy. It is vitally important that industry receives clarity on the funding and opportunities available to make the efficiency upgrades. This is absolutely necessary in parallel with the switch to low carbon methods of heating.
  • Hydrogen – whilst the government has delivered clarity on the role for heat pumps, the role for hydrogen is less clear. What we do know for certain though is that the government will make a final strategic decision in 2026 on the role of hydrogen in heating our businesses and homes. In between now and then, we expect further trials and testing to take place to help inform the government’s decision.

What’s next?

Although this strategy lays out a vision, we are still waiting on a lot of the detail. This includes specifics on minimum energy efficiency standards, targeted support for small businesses to reduce their energy use and the call for evidence on re-balancing electricity and gas costs on bills. 

The government has confirmed they will be consulting on some of these policy areas towards the start of 2022, including consultations on the market-based mechanism for low carbon heat and ending the installation of high carbon fossil fuels to heat homes off-grid.

Yet, what is clear from this strategy is the urgent need to decarbonise our building stock. As we highlighted in our report Renewable Nation, if we are to meet our climate objectives we need to thoroughly transform and upgrade the way we heat our homes and businesses. 

This decade will hopefully see a transformational change of our domestic heating sector. Through electrification, and supported by effective government policy, we can make low carbon heating solutions appealing to consumers and cut emissions at the same time. 

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